How Much Money Can I Borrow for a Car Loan?

By Alexi Falson on 13 Oct 2022
image for How Much Money Can I Borrow for a Car Loan? If you’re in the market for a new car, you would have at one point or another wondered just how much money you can safely borrow for a car loan.

With so many attractive options available to Australian car buyers, it’s hard not to be tempted by the latest and greatest models on offer, but it’s important that Australian buyers have their finances in order before making a purchase.

In the case of a car loan, the stakes of overextending your finances or failing to read the fine-print on interest rates and fees are too high to make a mistake, so let’s take a closer look at how much money you can borrow for a car loan today.

How Much Money Can I Borrow For a New Car Loan?

We’d love to give you a simple straightforward answer, here, but the reality is that how much money you’re able to borrow for a new car loan depends on a handful of things.

Namely, your employment status and current income, as well as the savings you have on hand, your credit score, your dependents, living expenses, any existing debts, and the amount of money you’re hoping to secure for your new vehicle purchase.

These factors form what is known as your ‘borrowing power,’ which financial lenders use to map out just how much money you’re able to borrow for a car loan in your current financial situation.

How To Find Your Borrowing Power

Most financial lenders here in Australia offer something along the lines of a borrowing calculator, which is one of the easiest ways to find out just how much a lender is willing to loan you for the purchase of a new car.

Once you’ve filled in the form and given the lender a clear picture of your financial position, the borrowing calculator will help to give you a ballpark figure of your current borrowing power.

What Impact Does a Credit Score Have on Borrowing Power?

A financial lender will only approve a car loan when they have confidence that you can meet your repayment obligations.

Your credit score is one of the best ways for them to gain a clear picture of your ability to meet previous debts and liabilities, and as a result, has a huge influence on how much money you can borrow for a car loan.

To find out everything you need to know about credit scores, the type of score required for a car loan and some great tips on how to improve your credit score, click here to read our guide.

How Much Money Can I Borrow for a Used Car Loan?

Purchasing a used car is a great way to acquire the vehicle of your dreams at a cut-price, and avoid some of the most costly depreciation that can wipe out one-third of a car’s value in the first couple of years.

The principles of lending and borrowing power don’t change much between new and used cars, though, which means the amount of money you can borrow for a used car loan is still dependent on your financial situation, credit history and more.

We’ve covered this exact topic in a previous article that explains the process of obtaining a used car loan that you can read here.

Tips to Compare Car Loans

  • Save up for a deposit

  • Check your credit score

  • Before applying, try to improve your credit score

  • Contact your local dealership for best possible finance options

  • Contact a car broker for finance options

  • Take note of the rate and comparison rate, repayments and the balloon payment

  • Analyse your income, budget and expenses to ensure you can meet terms

  • Choose the best deal

Request a Quote

If you’re interested in finding your dream car, click here to talk with one of our car buying experts who can help you secure the best possible finance options for your purchase.


Alexi Falson

Alexi is an automotive journalist and road tester hailing from Byron Bay. He has an affection for both cars and motorbikes, a great admiration for the simplicity of old-school engineering, and a fascination of new technology making its way to modern cars. When he's not road testing, you'll find him surfing, hiking or helping people find their dream cars.

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